MORNING BRIEFING – By Benedict Brogan (Daily Telegraph).
Another day, another scary development in the eurozone: today we report that Spainis facing “total emergency” as the country risks being frozen out of global capital markets and slides towards an epic showdown with Europe. Andrew Roberts of RBS describes a ‘negative feedback loop’ that can take Spainbeyond the point of no return. You can read the full story here.
The FT splash “Rush for havens as euro fears rise” captures yesterday’s flight to safety: British yields fell to their lowest level since 1703. Germany’s two-year bond yields fell to zero for the first time, below the equivalent rate for Japan, meaning investors are willing to lend to Berlin for no return.
All of a sudden Spain looks like Greece – it has a crashing economy, run on the banks – but this time it’s much bigger and more frightening.
Today too the Irish vote in their referendum. It’s worth picking out the FT’s picture of a Sinn Fein stunt to illustrate this: a man dressed as a stormtrooper outside the Dail standing by a sign that reads ‘Bundestag Irish office’. The markets are in for a bumpy ride.
A WAKE UP CALL FOR GEORGE OSBORNE
Closer to home, things still don’t look good for George Osborne. The FT’s leader column – titled “A wake up call for George Osborne” - urges the Chancellor to get a grip, while on the opposite page Conservative Home’s co-editor Paul Goodman suggests that the Chancellor could line up an EU referendum. He says:
“No wonder the Treasury has not moved to deny persistent claims that Mr Osborne is advising Mr Cameron to commit the Tories at the next election to an EU renegotiation referendum. Such a gambit would disrupt the UK Independence party, which is committed to an in-out poll; outmanoeuvre Ed Miliband, who is mulling the same option; and spike the guns of the London Mayor, who is flaunting his eurosceptic views before the Tory faithful like a medieval jester parading his livery.
I touched on the issue in my column yesterday: backbenchers are desperate for Mr Osborne to stop faffing about and start bringing some clarity and purpose to his operation. This week’s u-turns drive them nuts.
One told me MPs who used to defend Government policies when a constituent complained about them now issue vague holding answers, fearing that the policy might be reversed the minute they speak out to support it. There was another U-turn yesterday, by the way – on buzzards.
The Tory Right seem to be thinking of ways to punish him for all this. We report that the Institute of Economic Affairs has suggested that the Chancellor should be fined 20 per cent of his pay if he fails to deliver a balanced Budget every year.
And there are other financial concerns for the Chancellor-cum-strategist. The Times (£) reports that venture capitalist Jon Moulton doesn’t want to fund the Tories anymore. He said that George’s economic plan is too optimistic and that the charity tax has left him feeling “very uncomfortable”.
THE HEIGHT OF HUNTING SEASON
All this said, to my mind the most telling, implication-packed story today is Roland Watson’s fascinating account of a Downing Street briefing operation against Sir Jeremy Heywood. No 10 folk apparently blame him for the Leveson inquiry which, as many of us pointed out at the time, has turned into a monster that daily bites this Government’s backside.
We should remind ourselves of course that it was Gus O’Donnell – not Sir Jeremy – who was Cabinet Secretary when Leveson was set up last summer. Some of the blame must surely be landed on him. And bring Now what does that mean line up to end previous par.
A split between the PM and his chief official is a bad sign, and suggests No 10 is shaken and wobbling. Even more ominous is this line in the story: “It is understood that George Osborne was cautious about pressing ahead swiftly with the inquiry.”
Now, what might that mean? Jeremy Hunt appears before Leveson today. No 10 has argued for him to be allowed to make his case, and points out that what matters is how he behaved, not what he believed – in other words, Vince Cable was opposed to the deal, but no one suggests he behaves improperly. Let’s see what the hundreds of pages of documents from Mr Hunt that will be released today reveal. The FT (£) claims his adviser leaked details of the BBC licence fee settlement to Fred Michel.
Meanwhile, Sue Cameron in the Telegraph reveals who the mandarins rate in the race to succeed David Cameron. She lines up George Osborne (not as a shoo-in though), Michael Gove (apparently his Cabinet colleagues “fear him”), Philip Hammond (not as close to the PM as you might think) and Theresa May (despite being branded “not the brightest of bunnies”).
In the Guardian, Patrick Wintour has an interesting analysis of Andy Coulson’s arrest and its implications on David Cameron. He says:
“The question arises whether Cameron ever held that eyeball to eyeball confrontation with Coulson over the stream of allegations, or instead looked at the source of those allegations and rejected them.”
‘22 REASONS TO GET IT TOGETHER
And, of course, don’t forget the beast within. The new 1922 Committee is proving no easier than the last. New co-Secretary Nick de Bois gave an interview to the Huffington Post yesterday, warning that the Government U-turns are “frustrating” and “irritating” to Tory Backbenchers, and if they keep happening they could start to seriously damage the coalition’s credibility. He added:
“It has been immensely irritating to have been distracted by cornish pasties, and even caravan tax, which of course are important to the people they concern, I get that. But it’s taken the eye off what the Budget has done. Everything we do should be focused on generating fiscal discipline and creating a climate for growth.”
No 10 think all this horridness will go away though. In this week’s Spectator James Forsyth reveals that Downing Street aides are convinced that this summer’s events will help restore Dave’s reputation – the Jubilee and Olympics will be enough to wash it all away. All the more reason to be in the papers praising the Queen, eh Dave?
ROAD TAX ATTACK
We’ve splashed on the Government’s new road tax. Government officials have begun discussions with the motoring industry and drivers’ groups about an overhaul of the Vehicle Excise Duty rules. The talks come as ministers try to prevent a fall in tax revenues as more motorists choose smaller, cleaner cars that incur a lower rate of duty. Labour has accused the Coalition of planning a “stealth tax” on drivers, effectively punishing them for going green.
Ministers say that while they have not finalised their plans, changes may be necessary to ensure the “sustainability of the public finances”.
TWEETS AND TWITS
Baroness Jenkin spots a few interesting characters in Westminster last night:
“@Baronessjenkin: @eyespymp it WAS Pamela Anderson who flew in to support Frank and Vivienne Westwood celebrating Cool Earth’s 5th birthday #surrealevening!”
If you enjoy “Tweets and Twits” make sure you buy a copy of the Spectator this week. Andrew Roberts has a wonderful article on MPs’ endless inanities on Twitter and how it risks dispelling the mystique of parliament.
Latest YouGov/The Sun results: Conservatives 32%, Labour 44%, Lib Dems 9%, UKIP 7%
Overall government approval rating: -36
In The Telegraph
Peter Oborne: It may seem painless, but drone war in Afghanistan is destroying the West’s reputation
Sue Cameron: What would happen if David Cameron was run over by a bus?
Bruce Anderson: England is a green and pleasant man-made land
Leader: The broken society
Best of the rest
Paul Goodman in the Financial Times (£): Prepare for Osborne’s greatest gamble
Leader in the Financial Times (£): A wake-up call for George Osborne
Camilla Cavendish in the Times (£): But what about the super-class, Mr Milburn?
Timothy Garton Ash in the Guardian: Cameron mustn’t visit Ukraine while Tymoshenko remains imprisoned
Today: Justice Minister Jonathan Djanogly will set out proposals for extending the powers of the Legal Ombudsman.
Today: Business Minister Mark Prisk will provide an update on business incubators
Today: Ireland votes in a referendum
10am: Jeremy Hunt appears before the Leveson Inquiry. The Royal Courts of Justice, The Strand, London
10am: Boris Johnson and Bernard Hogan-Howe appear before London Assembly Police and Crime Committee. City Hall, The Queen’s Walk
1pm: Herman van Rompuy addresses Chatham House, 10 St James’s Square, London